P2P lending Lithuania news: NEO Finance IPO. NEO Finance is Lithuanian based P2P lending platform that focuses on personal loans and works directly with borrowers (not via loan originators). NEO Finance has been launched in 2015, and they became the leading P2P lending platform in Lithuania within the first year in terms of issued loans. Since the start, NEO Finance has already granted loans for almost 33 million euro. Already almost 7000 investors trust this platform and get very high ROI, which is in average 12%.
2018 in the Lithuanian P2P lending market was the year of ‘stabilisation’ and ‘settling down’. The Lithuanian P2P market grew: Although it was not a two-fold growth like in 2017, a growth of more than 50% was nonetheless impressive. In 2018, the Lithuanian P2P platforms issued consumer loans in the amount of EUR 26,748,691 (EUR 17,723,952 in 2017). In 2018, NEO Finance issued consumer loans in the amount of EUR 14,274,422 (53.4% market share), in 2017 – EUR 8,942,047 (50.5% market share).
IPO is a natural step for any kind of growing company. NEO started IPO preparations in 2018. Their goal with it is to show the commitment of staying a responsible and accountable organisation.
NEO Finance holds an Electronic money institution (EMI) licence which allows operations in entire European Union. The licence has been issued by the Financial regulation authority (FRA) of Lithuania, i.e. the Bank of Lithuania, and allows operations in P2P and consumer credit markets. NEO Finance is under the supervision of the Bank of Lithuania, which means that the company is obliged to perform external audit at least once a year, and constantly present the Bank of Lithuania with certain reports.
The company owns and operates under three separate brand names:
Paskolų klubas (www.paskoluklubas.lt): the brand that encompasses a set of products used to address retail borrowers and retail investors in Lithuanian market.
NEO Finance (www.neofinance.com): the brand that encompasses a set of products used to address retail investors in the EU and the EEA markets, investing in Lithuanian consumer credits.
Neopay (www.neopay.lt): the brand that represents company’s payment initiation service (PIS), an online real-time payment collection tool for e-commerce entities.
There are four main revenue sources for NEO Finance:
– Instalment fee for the borrowers. Every borrower is charged a fee on their instalment, which on average is approx. 5%. Instalment fee is distributed throughout the loan period, i.e. up to 60 months (5 years). At the moment, we have over EUR 3.2 M of instalment fee to be received in future periods, resulting from the already-issued loans.
– Secondary market fee. When an investment is bought or sold in the secondary market, NEO Finance earns a transaction fee of 1%.
– Payment initiation service (PIS) fee. As an e-money institution (EMI), we provide PIS to e-commerce entities. This helps them save considerable costs on transactions executed. Our fee ranges from EUR 0.05 to EUR 0.35 per single transaction.
– Interest on investments. NEO Finance co-invests in consumer credits in the same way as the current registered investors do, therefore, the company earns interest on investments.
NEO Finance has chosen the Dutch auction method in order to carry out their IPO (for the book building process). This means that NEO Finance will provide prospective investors only with the lower share price limit, whereas the investors will be able to choose both the price of the shares, as well as their quantity, to bid on. The maximum number of shares to be issued during the IPO is limited to 796,178. Both institutional and retail investors will be able to make their bids via IPO platform, which they will have to register in.
NEO Finance will take the bids not only via the IPO platform, but also via Šiaulių bank. Therefore, two ways of participation in the IPO are present: (i) vie the IPO platform, (ii) via financial partners. The IPO platform will be open for bidding from 15th May 10:00 a.m. to 4th June, 2019 11:59 p.m. Every single investor, be it institutional or retail investor, will be ensured with equal rights. NEO Finance managers, as well as board and supervisory board members, as well as persons related to them, are not allowed to participate in the IPO process.